Correlation Between G2D Investments and Companhia

Can any of the company-specific risk be diversified away by investing in both G2D Investments and Companhia at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining G2D Investments and Companhia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between G2D Investments and Companhia de Fiacao, you can compare the effects of market volatilities on G2D Investments and Companhia and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in G2D Investments with a short position of Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of G2D Investments and Companhia.

Diversification Opportunities for G2D Investments and Companhia

0.38

Correlation Coefficient

G2D Investments  Companhia

Weak diversification

The 3 months correlation between G2D and Companhia is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding G2D Investments and Companhia de Fiacao in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Fiacao and G2D Investments is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on G2D Investments are associated (or correlated) with Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Fiacao has no effect on the direction of G2D Investments i.e., G2D Investments and Companhia go up and down completely randomly.

Pair Corralation between G2D Investments and Companhia

Assuming the 90 days trading horizon G2D Investments is expected to generate 0.84 times more return on investment than Companhia. However, G2D Investments is 1.19 times less risky than Companhia. It trades about -0.09 of its potential returns per unit of risk. Companhia de Fiacao is currently generating about -0.11 per unit of risk. If you would invest  191.00  in G2D Investments on December 24, 2024 and sell it today you would lose (21.00) from holding G2D Investments or give up 10.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

G2D Investments  vs.  Companhia de Fiacao

G2D Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days G2D Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Companhia de Fiacao

Risk-Adjusted Performance

Very Weak

Over the last 90 days Companhia de Fiacao has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with G2D Investments and Companhia

The main advantage of trading using opposite G2D Investments and Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G2D Investments position performs unexpectedly, Companhia can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Companhia will offset losses from the drop in Companhia's long position.

The idea behind G2D Investments and Companhia de Fiacao pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.